MP seeks upper house inquiry on Macdonald

By Kate McClymont

7 January 2013 — 3:00am

THE disgraced former resources minister Ian Macdonald is facing accusations of a cover-up designed to stop Parliament seeing crucial documents that are now at the centre of NSW's coal corruption inquiry.

In November 2009, when Mr Macdonald was the minister in the state Labor government, the Liberals' Duncan Gay called on him and his department to produce all documents relating to the awarding of the Mount Penny coal exploration licence.

Ian Macdonald.

Photo: Edwina Pickles

Two boxes of documents were delivered, one released publicly, the other available for MPs to inspect. However, Mr Macdonald and his department failed to produce many key documents. Their existence has come to light as a result of the present inquiry into the Mount Penny tender by the Independent Commission Against Corruption.

The inquiry has heard allegations that Mr Macdonald provided inside information on the tender to his upper house colleague Eddie Obeid, which led to the Obeid family gaining a stake worth $60 million in the winning tenderer, Cascade Coal. A secret investor in Cascade was one of Mr Macdonald's closest friends, Greg Jones, the inquiry has heard.

''It's negligent at best and a cover-up at worst,'' says the Greens MP Jeremy Buckingham of the failure of Mr Macdonald and his department to produce the documents. Mr Buckingham has written to the Clerk of the Legislative Council asking for the issue to be investigated.

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Mr Buckingham called for a royal commission concerning the granting of mining licences. He also expressed concern that Mr Obeid, also a former resources minister, had granted dozens of licences.

ICAC has heard that in late 2008, after the expressions of interest for 11 exploration licences had closed, Mr Macdonald, against departmental advice, reopened the tender, claiming that additional small and medium-sized companies had written to the department asking to be included.

It has now been revealed that those letters were a sham and that five of the seven letters were sent by people linked to the winning bidder, Cascade Coal. None of these letters was included in the call for papers.

James McGuigan, the 29-year-old son of Cascade investor and White Energy director John McGuigan, admitted lying to the Department of Primary Industries in a letter purporting to be from Redman Mining expressing interest in a coal exploration licence. The title of ''exploration manager'' was one he had made up, Mr McGuigan told the inquiry.

Neil Whittaker, a former chief executive of the NRL, and now an executive with White Energy, also signed one of these letters. The inquiry heard that his letter used a ''dummy letterhead'' in the name of a non-existent company. Another letter was sent from White Energy, a company listed on the stock exchange.

A year after winning the Mount Penny tender, Cascade tried to sell the licence, for which it had paid the NSW government $1 million, to White Energy for $500 million.

Five of the seven Cascade investors were also directors of White Energy but omitted to tell the stock exchange and White Energy's independent directors their private company Cascade had bought out the Obeids' quarter ownership of Cascade for $30 million.

David Blunt, the Clerk of the Legislative Council, confirmed that ''concerns have been raised as to whether the order of the house had been complied with''. He would not confirm whether inquiries were under way but said Parliament would be informed of the concerns when it resumed on February 19.

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On the same day that Mr Gay called for the Mount Penny papers to be produced, in November 2009, the Greens MP Lee Rhiannon asked Mr Macdonald: ''Has the minister discussed with Mr Obeid the coal exploration process in this area or in any other areas … does Mr Obeid have inside knowledge of the potential for coalmines to be developed in the Cherrydale Park area, where his family bought land?''

Mr Macdonald responded: ''As usual, it is a bit of a fishing exercise by the Greens. I am pretty sure that the department has conducted this in an appropriate way.''